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Benitec's New CEO Talks About Rebuilding the Troubled Company

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Name:Sue Macleman
 
Position: CEO, Benitec
 
Background: EqiTx, CEO —2004-2006
Agenix, vice president of molecular diagnostics — 2002-2004
Bristol-Myers Squibb, medical affairs manager, assistant director of oncology and infectious diseases, Australia/New Zealand — 1997-2002
Masters of marketing, Melbourne Business School — 1999
Amgen, product specialist — 1995-1997
Schering-Plough, biopharmaceutical specialist — 1991-1994
BS, pharmacology, University of Queensland — 1984
 

 
Early last month, Benitec announced that it had hired Sue Macleman to be its new CEO. Though she comes to Benitec with experience on both the scientific and business side of the biopharmaceutical industry, Macleman has her work cut out for her.
 
Most recently, Benitec failed in its attempt to raise Aus$500,000 ($380,845) in cash as part of a share-purchase plan (see RNAi News, 9/14/2006).
 
Benitec said it would explore other opportunities to raise the cash it needs to stay afloat, but in the meantime it will try to eke some value out of what is essentially its only remaining asset: its intellectual property portfolio.
 
This week, RNAi News spoke with Macleman about joining the RNAi drug firm and how she plans to help it rebuild.
 
How did you become associated with Benitec?
 
I started to have a look at [the company’s] intellectual property at the request of [Chairman] Peter Francis, and also [learn] a little bit about the company in mid-August. I like the intellectual property. … There are a number of granted patents that had been filed across a broad jurisdiction and I thought they had enormous merit in the RNAi space.
 
Peter was looking for someone to come in an assist him in shutting down the US operations, restructure and refocus the business, and concentrate on a model of low-cost co-development and out-licensing. That’s what we’ve done in the last few weeks.
 
You knew Peter from your previous role at EqiTx where he was the firm’s corporate lawyer?
 
Yes. Peter is a very well-known technology and corporate lawyer within the Australian circles. In fact, he has a very close relationship with [Australia’s Commonwealth Scientific and Industrial Research Organization, which holds certain rights to Benitec’s expressed RNAi technology], and that has enormous benefits for us.
 
Peter came on board as a director of Benitec back in April this year and at that point set about undertaking a strategic review of the business and looking at what needed to change moving forward to maximize the portfolio that Benitec has.
 
This model of co-development and out-licensing, how do you plan to approach it?
 
My initial focus was just finding out where we were, and I was delighted that … the HIV project [with the City of Hope (see RNAi News, 9/3/2004)] is on-track … to file an IND this year. With respect to the US operations, I did go up there and have a look, and fortunately the HCV project that had been put on hold was in good shape. We’re looking to out-license that whole project and are hopeful that we’ll be able to finalize that in the next little while.
 
We also had a review of all the intellectual property in terms of where we were with our patent re-exam (see RNAi News, 9/8/2005), the Nucleonics litigation (see RNAi News, 3/16/2006), and all of that. We felt that we could find a positive way forward but absolutely had to cut costs.
 
We’ve moved the entire operation back to Australia. We’ve only got two full-time employees at present, although we’re looking to recruit one or two others, and we’ll concentrate in the first little while on co-investment in projects that have interesting targets where our [expressed RNAi] technology can be utilized — so a collaborative relationship with other companies. [We’re also] looking to out-license the technology into areas of therapeutic interest to companies … because we have global rights for all of the human therapeutic areas. …
 
We’ve also been able to strengthen … our relationship with Sigma-Aldrich, and that’s a very important relationship for us because they are a major shareholder in our company (see RNAi News, 10/28/2005).
 
In the next little while, it will be out-licensing the HCV project, making sure the HIV project gets into [human trials] … then to look at other projects where we can co-invest, and finally to look at out-licensing opportunities.
 
When you talk about co-investment opportunities, how will Benitec do that? Will you be able to contribute to the research if you don’t have any researchers on staff? What would you bring to the table in such a deal?
 
Initially, [we can offer] IP. However, I believe that you’ve got to take a proprietary stake with your technology, and I think that ultimately we will be looking to put some [scientific] people on — though not nearly in the same size as we had in Mountain View, [Calif.], in the US or at the same cost, for that matter.
 
We are very lucky in that there are some quite experienced investigators here in Australia in the RNAi space, including with CSIRO. We’re hoping that we can work with their R&D team on a couple of projects. But ultimately I’d like to see Benitec have a proprietary position and be building additional science and intellectual property with its own science team.
 
But right now, we’re in survival mode and we’re just having to raise some capital, rebuild the business, and maximize the portfolio.
 
So if everything should go well, you’d hope that Benitec would someday become an actual drug-development company again?
 
I’d like to see us at least co-investing and co-contributing into programs. I think that it’s a challenging time for the company right now, but having said that we’re looking forward to what we can do. And so far, so good.
 
Now we just have to raise some capital and do a rebuild, and that’s a long, slow process. We’ll look at all options that are good for shareholders. So we’ll look at mergers, acquisitions, co-investment, and taking a proprietary position ourselves. It will be whatever makes the most sense for our shareholders.
 
Is there any plan to perhaps take the company private?
 
There isn’t at this stage. We’re a publicly listed company [on the Australian Stock Exchange] and we’ll probably stay that way if that’s what our shareholders want. Clearly, our share price has taken a battering, and we understand that right now our shareholders aren’t very happy with us.
 
But we are rebuilding, and it is often a long, slow road back. But at this point we have no plans to privatize the company.
 
You mentioned Sigma-Aldrich is a big shareholder. What kind of stake do they have?
 
It’s just over 10 percent. Sigma-Aldrich is, in fact, our biggest shareholder. Our top 20 holders own about 58 percent of the company, and Sigma-Aldrich is the single biggest shareholder.
 
What’s the status of the re-exam in the US and the Nucleonics litigation?
 
The re-exam is ongoing. We are quietly confident that we will be fine because the patent has been re-examined in other jurisdictions around the world and has been re-issued. There’s nothing new, if you like, that’s been put into the USPTO process.
 
But it just needs to go through the time. I think we’ll probably have some resolution on this in the next six to 12 months, and I am hopeful that the patent will be re-issued and we can all get on with work.
 
Nucleonics is trying to reinstate the lawsuit that Benitec had dismissed. At this point, have you had any contact with them about possibly settling the dispute?
 
It’s in everyone’s interest not to do business with litigation. Both ourselves and Nucleonics are trying to work toward the best outcome for everyone. … They’re aiming to take us back to the District Court. That just has to go through its process. I expect that the hearings will be in the next couple of months, then it will be up to the judges to come back with their judgment, and that can take anywhere between 6 and 12 months.
 
In parallel, while all that is happening, both Bob [Towarnicki, president and CEO of Nucleonics,] and myself are looking for ways that we can get on with business and perhaps not continue to litigate each other.

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